No entrepreneur sets out to run a lousy business, but according to investment guru Warren Buffett, there’s profound wisdom to be gained from such experiences. In Buffett’s view, navigating the challenges of a struggling enterprise offers unparalleled lessons that go beyond the reach of a high IQ.
During the 2017 Berkshire Hathaway Annual Meeting, Buffett emphasized the importance of experiencing the hardships of managing a lousy business firsthand. He remarked, “I really think if you want to be a good evaluator of businesses, an investor, you really ought to figure out a way, without too much personal damage, to run a lousy business for a while.” For Buffett, the insights gained from grappling with the difficulties of a failing venture are invaluable.
Buffett went on to explain that enduring the trials and tribulations of a subpar business provides a unique perspective on the intricacies of entrepreneurship. He stated, “I think you learn a whole lot more about business by actually struggling with a terrible business for a couple of years than you learn by getting into a very good one where the business itself is so good that you can’t mess it up.”
In essence, Buffett advocates for the hands-on, immersive learning that comes from managing a business facing challenges. He believes that this experience equips individuals with a deeper understanding of the complexities of the business world, emphasizing the importance of resilience, adaptability, and strategic decision-making.
So, while no one aspires to run a lousy business, Warren Buffett’s insights underscore the transformative power of facing adversity and emerging stronger on the other side. It’s through these challenges that individuals gain a practical education in business, ultimately becoming more adept evaluators and investors in the long run.
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© 2023 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.